Kerry announces $4 billion economic development proposal for West Bank

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U.S. Secretary of State John Kerry jokingly checks his height compared to a student, who was used as his stand-in for rehearsals, before the start of a town hall meeting with students in Addis Ababa, Ethi­o­pia on May 26, 2013. (JIM YOUNG/REUTERS)

DEAD SEA, Jordan — Hoping to use economic promise as a bridge to a peace deal between Palestinians and Israel, Secretary of State John F. Kerry announced an estimated $4 billion economic development proposal for the West Bank on Sunday that he said could cut the 21 percent unemployment rate by two-thirds.

“The greatest existential threat and the greatest economic threat to both sides is the lack of peace,” Kerry said. “To not try to head these off would be tragic, and it would be irresponsible.”

International business leaders rallied by former British prime minister Tony Blair will propose new agricultural, construction and other investment to the Palestinian Authority that could increase the Palestinian gross domestic product by 50 percent over three years, Kerry said.

The State Department would not identify participating companies or provide other details about the content or timing of individual proposed investments. The money would come from the private sector, not U.S. taxpayers.

Kerry addressed a World Economic Forum meeting after speeches by Palestinian Authority President Mahmoud Abbas and Israeli President Shimon Peres. The gathering on the shores of the Dead Sea in Jordan was a rare direct meeting between Israeli and Palestinian leaders, although Israeli Prime Minister Benjamin Netanyahu did not attend.

Improving lives and expectations for Palestinians, many of them young and underemployed, is key, Kerry said, to building an independent Palestinian state at peace with neighboring Israel. And there is no time to waste, he said.

Kerry offered no specifics on the program, but said it would focus on jobs and tourism.

Blair and Tim Collins, a billionaire investor and friend of Kerry’s, recruited business leaders over the past six weeks as Kerry tried to nudge the two sides back to direct peace talks that have been mostly stalled for five years.

“Negotiations can’t succeed if you don’t negotiate,” Kerry said Sunday.

Peres and Abbas both thanked Kerry for his efforts and pledged willingness to make peace.

“I have an agreement here which you both can come up and sign,” Kerry joked. “We’ll get there, we’ll get there.”

Kerry has made restarting peace talks the main objective of his tenure as secretary of state, devoting much of the past three months to preparations that ask both sides to make good-faith concessions that would improve the atmosphere for talks. He said last week that his goal is talks without preconditions, which he called the bane of past attempts.

Peres made a direct invitation to Abbas, calling him Israel’s partner for peace.

Abbas delivered a largely unyielding address, accusing Israel of failing to seize the opportunity for peace presented by the 2002 Arab Peace Initiative, which Kerry is using as a basis for new talks.

Abbas appeared to remain skeptical of Israel’s intentions.

He repeated that Palestinians will not accept “economic solutions” as a replacement for a free and sovereign country, nor would they accept “a temporary state, with temporary borders,” meaning a deal in which Israel agrees to borders for 50 percent of Palestine with a promise to revisit the issue in 15 years.

Peres said he would not argue with Abbas nor debate the details from the stage.

Directing his remarks directly to Abbas, Peres said, “President Abbas, you are our partner, and we are yours.”

He said all their differences are deeply moving and important, but he called on Abbas to sit down with the Israelis and negotiate. “You will be surprised how much can be achieved,” he said.

“Skeptics don’t make history,” he added.

Peres applauded Kerry’s economic ideas as “imaginative,” but agreed with Abbas that they were not a replacement for peace negotiations.

Abbas praised the Arab Peace Initiative as a vital document. Introduced in 2002 by Saudi Arabia and endorsed again recently by Arab diplomats, the Arab League initiative offers Israel full recognition and normalization with all Arab nations in exchange for Israel withdrawing to its 1967 borders, including pulling out of East Jerusalem, and “just settlement” for Palestinian refugees who wish to return home to live in peace or receive compensation.

“So what are we waiting for?” Abbas said. “We plead with you. Just read these two pages.”

At the forum, a group of Israeli and Palestinian corporate leaders moguls announced a new business-led initiative called “Breaking the Impasse,” aiming to pressure their respective governments to pursue peace negotiations.

The group is led by a pair of billionaires, Israeli high-tech impresario Yossi Vardi and Palestinian “Duke of Nablus” Munib al-Masri, who made his first fortune in oil and gas, and now runs a holding company that owns hotels, mobile carriers and banks. Their goal is to leverage the collective clout of 300 business and civic leaders who signed on to the plan and persuade wary politicians to reach out for a two-state solution.

“We hear often of the extremists, but the majority is silent,” Vardi said. “We believe that most of the people want to get an end to this conflict.”

Masri told Kerry that the business leaders had pledged “not to enter into any joint economic commercial schemes that legitimize the occupation” of the Palestinian territories by Israel, raising immediate questions about how much room the Kerry economic package might have to grow.

Pointing out that the business leaders who signed the initiative “are responsible for a substantial part of gross domestic product of both countries,” Masri said they wanted the two sides to enter into “real negotiations” now.

The International Monetary Fund this month said that economic conditions in the West Bank and Gaza Strip had worsened recently, and that about a quarter of the population was unemployed at the end of 2012.

“The economy is hobbled by persistent restrictions and increasing political uncertainty,” the IMF report said. “Urgent actions are needed — by the Palestinian Authority, by Israel, and by donors — to stabilize the fiscal position and rekindle economic growth.”

The World Bank estimates the GDP of the West Bank and Gaza Strip at $4 billion, or about $1,030 per person.

In March, the World Bank said the prolonged restrictions on Palestinians are causing lasting damage to Palestinian competitiveness. Agricultural productivity has dropped by roughly half since the late 1990s, and the manufacturing sector has largely stagnated, the report said.

“Palestinian institutions have the required capacity to exercise state functions, but Israeli-imposed economic restrictions continue to constrain sustainable economic growth,” the World Bank report said. “This situation is unlikely to change as long as political progress remains absent.”